Critics Blast VW Governance, Exec Pay Ahead of Annual Meeting

Three large European investor advisory firms have harshly faulted Volkswagen AG management for reneging on its promise to release a report by an independent investigation into the company’s diesel emission cheating, notes the Financial Times.

The advisors also call on VW shareholders to reject the company’s new executive compensation plan, citing its “unexplained and drastic increases” in base pay.

Both matters be before the annual shareholders meeting on Wednesday. But with VW’s founding families controlling 52% of the company’s voting rights, neither measure will prevail.

The highly critical advisors are Brussels-based Deminor and two British firms: Institutional Shareholder Services (ISS) and Hermes Equity Ownership Services.

VW conceded when the diesel scandal broke in September 2015 that the cheating was due in part to a corporate mindset that stifled open discussion of problems. The company vowed to make its structure more transparent and said it would present a probe into the diesel crisis by the U.S. law firm Jones Day.

ISS, Hermes and Deminor say the company has done neither. ISS gives VW its worst possible rating on corporate governance. Hermes describes itself as “underwhelmed” by reforms to date. And Deminor says the company’s corporate culture has worsened since the diesel crisis.

The advisors also are concerned about the sudden departure in January of Christine Hohmann-Dennhard, who was hired by in October 2015 to head VW’s integrity and compliance. She reported to Manfred Doss, compliance chief for the holding company that controls VW. He was named head of VW legal affairs upon her arrival. German lawmakers have called for an investigation into Hohmann-Dennhard’s departure.